Whether you’re managing on a smaller income or simply looking to better manage your budget, cutting expenses can be difficult when all of your monthly bills seem like they’re necessary. However, even if you’re smart with your spending, it’s likely that you still have costs you can cut.

You can start by tracking your spending for a month and then determining whether each item is a fixed, variable, or discretionary expense. For each type of expense, there are different tactics you can use to try to cut back:

Fixed expenses

A fixed expense has a dollar amount that doesn’t change month to month, such as mortgages, school loans, or rent.
Ways to cut: While these bills remain steady over time, making proactive choices can impact these amounts in the long term. If you’re a renter, consider finding a smaller space or getting a roommate if your lease allows it.


If you drive to work or school, consider carpooling, biking, or taking public transportation.

Variable expenses

These necessary expenses vary based on your usage, such as grocery costs, utility bills, and transportation.

Ways to cut:

  • If you drive to work or school, consider carpooling, biking, or taking public transportation.
  • Try to reduce your energy costs by limiting your air conditioning use in summer and turning down the thermostat in the winter.
  • If you have both a landline and mobile phone, consider whether discontinuing the landline is an option for you, along with a more economical mobile plan.
  • If you have a premium cable subscription, try renting movies or watching shows online to see if you can manage with basic cable or no cable at all.

Discretionary expenses

These expenses include anything based on personal wants and needs, such as clothing, entertainment, and restaurant expenses.

Ways to cut:

  • Revisit your daily routines and spending. For example, if you’re buying a $4 coffee drink each morning, that adds up to $1,460 each year.
  • Consider cooking at home more and making dining out an occasional activity.
  • Try to reduce the number of personal services you pay for. If you can do your own manicures, landscaping, or pet grooming, you may be surprised by how much you’ll save.

Cutting expenses can involve major lifestyle changes, but also modest adjustments in how you spend. Avoiding overspending can also help you achieve financial success in the long run.

Fixed expenses don't change month to month and can't be reduced.

Next Question


Empower yourself with financial knowledge

We’re committed to helping with your financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.

My Financial Guide